Isles of Scilly MP Andrew George has warned that as one tax loophole to support second homes has closed, another ?gaping hole has opened up.?
Mr George led the Commons campaign to remove the 50% Council Tax discount for second homes - which is largely to be scrapped this April ? but is concerned that the Government has introduced a new tax loophole which he believes is likely to stimulate greater demand for second and holiday homes, contributing to rapidly increasing house prices.
Mr George says that the Pre-budget report last year set out proposals to allow Self Invested Personal Pensions (SIPPs) to invest in property. This could be used by wealthy self-employed, small business operations etc. to get 40% tax relief on the money used to purchase holiday homes and exemption from any capital gains tax on the sale of the property, were the proceeds re-invested in a pension plan.
Mr George said, ‘Many pension schemes are seriously failing and I am sure that most business people and the self-employed will look very carefully at this option. In the present climate this would enflame the market for second and holiday homes in place like Cornwall and the Isles of Scilly.
‘This would be very bad news for locals, especially young local people who are already suffering in what is an appalling and unprecedented housing crisis.
‘There is hardly any affordable accommodation on the market now. If the Government implements this plan there could be absolutely no affordable housing at all.?